Baltic Dry Index. 1557 -22 Brent Crude 78.08
If economists could
manage to get themselves thought of as humble, competent people on a level with
dentists, that would be splendid.
John Maynard Keynes
This week it’s all
about Trade War Team Trump’s next move, likely this Thursday with the big guns
firing on China. China has promised to fire its big guns right back. Trying desperately
to keep out of the firing line is poor Canada, but it’s a far easier target for
Trump’s guns to hit, and Canada has only modest guns to fire back.
Perhaps switching
snowbird winter tourism to the Caribbean and Mexico, might do it, but since Trump’s
actions are now all only focused on the critical US mid-term elections on
November 6th, it’s a delayed action counterstrike at best.
Below, today’s early
action out in the east, plus a tale of two storms just starting to play-in to
the global economy. Keep an eye on Brent crude and the Baltic Dry Index too. Trump’s
oil war against Iran is really starting to kick in now, while the shipping
index might give us the first sign of a bad retail Christmas ahead.
September 4, 2018 / 1:42 AM
Asian shares hit by trade friction, emerging market tumult; dollar up
SHANGHAI
(Reuters) - Asian shares fell and the dollar turned higher on Tuesday as the
trade dispute between the United States and China threatened to escalate this
week, and as emergency austerity measures in Argentina underscored the
turbulence gripping emerging markets.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was
down 0.3 percent. Chinese blue-chips .CSI300
also fell 0.3 percent, reversing earlier gains. Japan's Nikkei .N225 slid less than 0.1 percent, while Australian shares were 0.4 percent lower ahead of a central bank policy meeting.
On Monday, European shares ended mostly flat, though a weak British pound helped to lift London's blue-chip FTSE .FTSE almost 1 percent. U.S. markets were closed for Labor Day.
But U.S. stock market futures edged higher on Tuesday, with S&P500
E-mini futures ESc1 gaining 0.1 percent to 2905.5.
“The majors are the focus today rather than emerging markets,” said Greg
McKenna, chief market strategist at Axi Trader in Sydney, noting that weak
manufacturing data and the imposition of austerity measures in Argentina had
drawn the market’s attention on Monday.
“Today it’s back to where is the U.S. dollar going, and at the moment
the vote in Asia has been it’s going to strengthen again,” he said.
“It’s utterly consistent that the U.S. dollar is strengthening at the
same time that U.S. futures are rallying if what we’ve seen over the last two
months, which is money being allocated to the U.S. and away from other regions,
continues.”
----Manufacturing surveys released on Monday showed mounting stress on factories across Europe and Asia as the outlook for global trade dims.
Also on Monday, Argentine President Mauricio Macri announced new taxes on exports and steep cuts to government spending in what he termed “emergency” measures to balance next year’s budget.
The Argentine peso ARS=RASL closed 3.14 percent weaker on Monday and is expected to face further pressure in coming days.
Turkey’s central bank signaled on Monday it would take steps to combat “significant risks” to price stability, comments seen as hinting at interest rate hikes.
More
Businesses Shuttered as Historic Typhoon Jebi Lands in Japan
By Sophie Jackman
Updated on 4 September 2018, 04:25 GMT+1
Typhoon Jebi made landfall in western Japan on Tuesday, believed to be the
strongest tropical cyclone to come ashore in Japan in 25 years. The storm has
paralyzed Japan’s second-largest population center, with flights and trains
canceled across the region and companies forced to temporarily close their
plants.Jebi, the 21st typhoon of the season, made landfall in Tokushima prefecture on Japan’s smallest main island of Shikoku, and is on path to strike the part of the country home to Osaka, Kyoto and Kobe. The typhoon was carrying strong winds of up to 162 kilometers per hour (100 mph), according to the Japan Meteorological Agency.
The typhoon has disrupted business in one of Japan’s main industrial
centers. West Japan Railway Co. halted all local services in the area’s three
main cities by noon. Shinkansen high-speed trains between Osaka and Hiroshima
were canceled from mid-morning, with the operator warning it might not be able
to restart services for the rest of the day. Services from Tokyo to Osaka were
running reduced operations.
ANA Holdings Inc. canceled 281 domestic and 8 international flights,
while Japan Airlines Co. pulled 213 domestic and 5 international flights
flights. The Universal Studios Japan theme park, one of Osaka’s main tourist
draws, will shut down for the entire day.
----Toyota
Motor Corp. halted operations at most of its group plants, with its unit
Daihatsu set to make a decision on production later today. Honda Motor Co.
stopped its Suzuka plant in Mie prefecture, while Kyoto-based Kyocera Corp. and Murata Manufacturing Co. said they will close some of
their facilities.
After hitting western Japan, Jebi is set to speed up further as it passes over the main island of Honshu and into the Sea of Japan, where it will weaken. While Tokyo will be spared the worst of the storm, authorities have warned of very strong winds and heavy rain even in the capital.
The typhoon is also bringing further downpours to areas that were devastated by sudden rainfall in early July that killed more than 200 people. Jebi is predicted to bring heavy rains through Wednesday.
More
September 4, 2018 / 1:47 AM
U.S. Gulf Coast bracing for Hurricane Gordon as storm nears
(Reuters)
- Tropical Storm Gordon whipped the southern tip of Florida with high winds and
rain on Monday, and was expected to make landfall as a hurricane along the central
U.S. Gulf Coast on Tuesday night, the National Hurricane Center (NHC) said.
The
storm was forecast to come ashore late on Tuesday near the border between
Louisiana and Mississippi, and drop as much as 8 inches (20 cm) of rain in some
areas of the U.S. South still reeling from hurricanes a year ago.
Louisiana Governor John Bel Edwards declared a state of emergency,
saying 200 Louisiana National Guardsmen were being deployed, along with 63
high-water trucks, 39 boats, and 4 helicopters.
The Mississippi Emergency Management Agency warned of storm surges of
between 3 and 5 feet (1 and 1.5 meters) and told South Mississippi residents to
be prepared to evacuate.
Gordon was generating winds of 50 miles per hour (80 km per hour) on
Monday as it steamed west-northwest at 16 mph (27 kph), the National Hurricane
Center said.
Gordon
was located about 330 miles (530 kms) east-southeast of the mouth of the
Mississippi River with maximum sustained winds of 60 miles per hour (95
kms/hour), the Miami-based weather forecaster said in an advisory late on
Monday.
----At the mouth of the Mississippi River, around the area of New Orleans, the storm could generate a surge of up to 4 feet(1.2 metres) and smaller surges could hit coastland along other parts of the Gulf Coast, the Miami-based hurricane center said.
U.S. oil producer Anadarko Petroleum Corp on Monday evacuated workers
and shut production at two offshore oil platforms, and other companies with
production and refining operations along the Gulf Coast said they were securing
facilities.
The
U.S. Coast Guard also warned that the ports of New Orleans as well as Gulfport
and Pascagoula, Mississippi, may have to close within 48 hours when gale force
winds from Gordon are expected to arrive.
In trade war news, with
China, President Trump seems to have bitten off more than he can chew, and his
policy will end up self-excluding US products from China’s growing consumer
market, but now it’s all about short term politics and the November 6th
US mid-term elections. With 24 hour dumbed down sound bite news, who needs to
think of the longer term consequences?
China's Consumers Are On Point to Defend Economy From Trump
Bloomberg News
Updated on 3 September 2018, 04:52 GMT+1
For the growth driver that will keep the world’s second largest economy on
track this year, look beyond Beijing or Shanghai.Life for many in China’s most sophisticated consumer markets is getting harder, with soaring rents gnawing at disposable incomes. As Donald Trump’s trade war with China begins to threaten the economy in earnest, with tariffs on another $200 billion of goods potentially arriving this week, the resilience of the economy will depend to a large extent on the confidence, or otherwise, of shoppers outside those zones.
-----Elsewhere, things are different though, and the massive shift of China’s population upward in the wealth stakes is still continuing. While retail sales growth slowed sharply in 2018 to below 9 percent year on year, that may not capture the full picture and, indeed spending as recorded by the government’s quarterly household survey has accelerated.
“Many people might feel the pressure to cut expenses, for example like young graduates hit by the rising rents, or the savers who lost money due to defaults of peer-to-peer lending platforms,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp Ltd in Singapore. “But if you look at spending on overseas tourism, which is a good indicator of how wealthy people feel about themselves and how optimistic they are, the number is quite sound.”
Tourism
is indeed holding up, with 71.3 million visits abroad made in the first half of this year, up 15
percent on the year. But getting a reading on the ups and downs of people’s
readiness to spend in China is still not easy. There’s no closely-watched
monthly gauge of consumer sentiment as in the U.S. and high-frequency data like
retail sales don’t cover the full range of spending in a modern economy, such
as online shopping and services like travel, education and healthcare.
That
leaves executives with an incomplete picture when estimating their chances of
success -- a bad state of affairs when an extra shock like the tariffs comes
along. Kyle Francis Gendreau, chief executive officer of luggage-maker
Samsonite International SA, said in an interview last week that trade-war noise will translate into
slower sales growth for his company in China this year.
----Fu and Guo together make a fuller picture of China’s consumption culture. There is evidence that the nation’s spending power may weaken in the short term, but a derailment of the nation’s broader shift to an economy driven by consumption rather than exports and investment is far fetched.
Wang Tao, head of China economic research at UBS AG in Hong Kong, says
that although consumption is likely to slow further into 2019, the underlying
trend should continue.
More
Global debt soars, along with fears of crisis ahead
By David J. Lynch / The Washington Post / WP Bloomberg
Posted Sep 3, 2018 at 3:00 PM
Ten years after the worst financial panic since the 1930s, growing debt
burdens in key developing economies are fueling fears of a new crisis that
could spread far beyond the disruption sweeping Turkey.
The loss of investor confidence in the Turkish lira, which has
surrendered more than 40 percent of its value this year, is only a preview of
debt problems that could engulf countries such as Brazil, South Africa, Russia
and Indonesia, some economists say.
“Turkey is not the last one,” said Sebnem Kalemli-Ozcan, an economics
professor at the University of Maryland. “Turkey is the beginning.”
For now, few experts think that a broader crisis is imminent, though
Argentina this week asked the International Monetary Fund to accelerate a
planned $50 billion rescue as the peso crashed to a historic low. But the
danger of a financial contagion that could hit Americans by crushing U.S.
exports and sending the stock market plunging should be taken more seriously in
light of a massive increase in global debt since the 2008 downturn, the
economists said.
Total debt is a whopping $169 trillion, up from $97 trillion on the eve
of the Great Recession, according to the McKinsey Global Institute.
While previous debt crises involved U.S. households and, later,
profligate European governments such as Greece, this time the concern centers
on companies in emerging markets that borrowed heavily in dollars and euros.
In Turkey, for example, companies and banks borrowed in recent years to
finance bridges, hospitals, power plants and even a mammoth port development
for cruise ships.
Foreign investors, particularly European banks, lent freely in search of
the higher returns these markets offered at a time when the U.S. Federal
Reserve and European Central Bank were keeping interest rates low.
“We were supposed to correct a debt bubble,” said David Rosenberg, chief
economist at Gluskin Sheff, a wealth-management firm. “What we did instead was
create more debt.”
Those bills are coming due, and Turkish borrowers, like those in other
developing countries, may not have the dollars and euros to pay them back.
More
“When
the music stops, in terms of liquidity, things will be complicated. But as long
as the music is playing, you’ve got to get up and dance. We’re still dancing.”
Citigroup
CEO Chuck Prince July 2007.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, deeply troubled Tesla again. What’s that showing up in troubled
Tesla’s rear-view mirror? No not the SEC and the US tort bar, but could it be
real EV competition at long last?
September 3, 2018 / 1:15 PM
Electric Mercedes opens German assault on Tesla
STOCKHOLM/PARIS
(Reuters) - Mercedes-Benz is set to unveil its much-anticipated electric SUV on
Tuesday, marking the start of a German onslaught against Tesla’s (TSLA.O)
dominance of the fast-growing market for premium battery cars.
Daimler-owned (DAIGn.DE) Mercedes, BMW (BMWG.DE) and Volkswagen’s (VOWG_p.DE) Audi and Porsche divisions are all gunning for the $52 billion Californian upstart, with early publicity efforts emulating its tech-industry halo.
The market for upscale electric cars is Tesla’s to lose, with sales of its entry-level Model 3 sedan expected to reach about 50,000 cars this year and almost double that in 2019.
The Mercedes EQC - whose launch program in Stockholm features yoga in a direct appeal to the Millennials who have flocked to Tesla - is the first production model under the carmaker’s electric EQ sub-brand. It will be closely followed by similarly hyped debuts for BMW and Audi.
“While Tesla currently has a strong hold on the luxury electric market, I don’t think this will be the case after the arrival of the German premium offerings,” said Wajih Hossenally, an automotive powertrain analyst with IHS Markit.
“Tesla
has virtually zero competition - but this will change from 2019 onwards.”
Rival forecaster LMC Automotive agrees, predicting a steady decline in
Tesla’s share of an exploding electric-car market over the next decade, from
today’s 12.3 percent to 2.8 percent, even as its absolute sales continue to
rise.
The Germans’ combined market share will surpass Tesla’s to reach 11.8
percent in 2020 before increasing further to about 19 percent three years
later, according to its projections.
The new Mercedes, due to reach its first customers next year, will be
priced close to the fuel-burning GLC to compete in the same bracket as Tesla’s
$49,000 Model 3, helped by its hotter-selling SUV form.
An affordable Model Y SUV is slated to join Tesla’s high-end Model X
crossover and Model S car, but not before 2020-21.
The EQC softens its higher-riding proportions with sporty curves and a
distinctive full-width rear light, while the interior resembles that of the
Mercedes C-Class - a reminder of economies of scale that electric-only Tesla
cannot match.
Well aware that their earlier battery-car offerings have failed to get
anything like Tesla’s level of public attention, the German brands are doggedly
courting Silicon Valley-style buzz for the coming product blitz.
More
“It is hard for us, without being flippant, to even see a scenario
within any kind of realm of reason that would see us losing one dollar in any
of those [CDS] transactions.”
Joseph J. Cassano, a former A.I.G. executive, August 2007, on Credit
Default Swaps that wiped out A.I.G in 2008.
Technology Update.
With events happening fast in the
development of solar power and graphene, I’ve added this section. Updates as
they get reported. Is converting sunlight to usable cheap AC or DC energy
mankind’s future from the 21st century onwards?
Chemists make breakthrough on road to creating a rechargeable lithium-oxygen battery
Date:
August 23, 2018
Source:
University of Waterloo
Summary:
Chemists have successfully resolved two of the most challenging issues
surrounding lithium-oxygen batteries, and in the process created a working
battery with near 100 per cent coulombic efficiency. The new work demonstrates
that four-electron conversion for lithium-oxygen electrochemistry is highly
reversible. The team is the first to achieve four-electron conversion, which
doubles the electron storage of lithium-oxygen, also known as lithium-air,
batteries.
Chemists from the University of Waterloo have successfully resolved two
of the most challenging issues surrounding lithium-oxygen batteries, and in the
process created a working battery with near 100 per cent coulombic efficiency.
The new work, which appears this week in Science, proves that
four-electron conversion for lithium-oxygen electrochemistry is highly
reversible. The team is the first to achieve four-electron conversion, which
doubles the electron storage of lithium-oxygen, also known as lithium-air,
batteries.
"There are limitations based on thermodynamics," said Linda
Nazar, Canada Research Chair of Solid State Energy Materials and senior author
on the project. "Nevertheless, our work has addressed fundamental issues
that people have been trying to resolve for a long time."
The high theoretical-energy density of lithium-oxygen (Li-O2)
batteries and their relatively light weight have made them the Holy Grail of
rechargeable battery systems. But long-standing issues with the battery's
chemistry and stability have kept them a purely academic curiosity.
Two of the more serious issues involve the intermediate of the cell
chemistry (superoxide, LiO2) and the peroxide product (Li2O2)
reacting with the porous carbon cathode, degrading the cell from within. In
addition, the superoxide consumes the organic electrolyte in the process, which
greatly limits the cycle life.
Nazar and her colleagues switched the organic electrolyte to a more
stable inorganic molten salt and the porous carbon cathode to a bifunctional
metal oxide catalyst. Then by operating the battery at 150 C, they found that
the more stable product Li2O is formed instead of Li2O2. This
results in a highly reversible Li-oxygen battery with coulombic efficiency
approaching 100 per cent.
By storing O2 as lithium oxide (Li2O) instead of lithium
peroxide (Li2O2), the battery not only maintained excellent charging
characteristics, it achieved the maximum four-electron transfer in the system,
thereby increasing the theoretical energy storage by 50 per cent.
"By swapping out the electrolyte and the electrode host and raising
the temperature, we show the system performs remarkably well," said Nazar,
who is also a University Research Professor in the Department of Chemistry at
Waterloo.
There can be few fields of human endeavour in which history
counts for so little as in the world of finance. Past experience, to the extent
that it is part of memory at all, is dismissed as the primitive refuge of those
who do not have the insight to appreciate the incredible wonders of the
present.John Kenneth Galbraith.
The monthly Coppock Indicators finished August.
DJIA: 25,965 +207 Down. NASDAQ:
8,110 +265 Up. SP500: 2,902 +168 Up.
All
three slow indicators moved down in March, but the S&P and NASDAQ have now turned
up. September will be critical for
confirmation of this change.
The stock market is a device for transferring money from the impatient to the patient.
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